Tenant Fees Bill (HL Bill 152)

Tenant Fees BillPage 30

(c) none of paragraphs 6 to 12 of Schedule 2 have applied so as to permit
the landlord or letting agent not to repay the earlier deposit or the
part that has not been repaid.

(6) The reference in sub-paragraph (5)(a) to a landlord or letting agent receiving
5a holding deposit does not include the landlord or letting agent doing so
before the coming into force of Schedule 2.

Payment in the event of a default

4 (1) Subject to sub-paragraphs (3) to (8), a payment in the event of a relevant
default by the tenant is a permitted payment if the tenancy agreement
10requires the payment to be made.

(2) In this paragraph “relevant default” means—

(a) the loss of a key to, or other security device giving access to, the
housing to which the tenancy relates, or

(b) a failure to make a payment of rent in full before the end of the period
15of 14 days beginning with the date (“the due date”) on which the
payment is required to be made in accordance with the tenancy
agreement.

(3) If, in the case of a payment required to be made to a landlord or letting agent
in respect of a relevant default within sub-paragraph (2)(a), the amount of
20the payment exceeds the costs which—

(a) are reasonably incurred by the landlord or letting agent as a result of
the default, and

(b) are supported by evidence in writing which is provided to the
person on whom the requirement to make the payment is imposed,

25the amount of the excess is a prohibited payment.

(4) If, in the case of a payment required to be made to a landlord or a letting
agent in respect of a relevant default within sub-paragraph (2)(b), the
amount of the payment exceeds the amount determined in accordance with
sub-paragraph (5), the amount of the excess is a prohibited payment.

(5) 30The amount referred to in sub-paragraph (4) is the aggregate of the amounts
found by applying, in relation to each day after the due date for which the
rent remains unpaid, an annual percentage rate of 3% above the Bank of
England base rate to the amount of rent that remains unpaid at the end of
that day.

(6) 35In sub-paragraph (5) “Bank of England base rate” means—

(a) the percentage rate announced from time to time by the Monetary
Policy Committee of the Bank of England as the official dealing rate,
being the rate at which the Bank is willing to enter into transactions
for providing short term liquidity in the money markets, or

(b) 40where an order under section 19 of the Bank of England Act 1998 is
in force, any equivalent percentage rate determined by the Treasury
under that section.

(7) If—

(a) a landlord requires a relevant person to make a payment to the
45landlord in respect of a relevant default within sub-paragraph (2)(b),
and

Tenant Fees BillPage 31

(b) a letting agent subsequently requires a payment to be made to the
letting agent in respect of the same default,

the payment referred to in paragraph (b) is a prohibited payment.

(8) If—

(a) 5a letting agent requires a relevant person to make a payment to the
letting agent in respect of a relevant default within sub-paragraph
(2)(b), and

(b) a landlord subsequently requires a payment to be made to the
landlord in respect of the same default,

10the payment referred to in paragraph (b) is a prohibited payment.

5 A payment of damages for breach of a tenancy agreement or an agreement
between a letting agent and a relevant person is a permitted payment.

Payment on variation, assignment or novation of a tenancy

6 (1) A payment is a permitted payment if it is a payment—

(a) 15to a landlord in consideration of the variation, assignment or
novation of a tenancy at the tenant’s request, or

(b) to a letting agent in consideration of arranging the variation,
assignment or novation of a tenancy at the tenant’s request.

(2) But if the amount of the payment exceeds the greater of—

(a) 20£50, or

(b) the reasonable costs of the person to whom the payment is to be
made in respect of the variation, assignment or novation of the
tenancy,

the amount of the excess is a prohibited payment.

25Payment on termination of a tenancy

7 (1) A payment is a permitted payment if it is a payment to a landlord in
consideration of the termination of a tenancy at the tenant’s request—

(a) in the case of a fixed term tenancy, before the end of the term, or

(b) in the case of a periodic tenancy, without the tenant giving the period
30of notice required under the tenancy agreement or by virtue of any
rule of law.

(2) But if the amount of the payment exceeds the loss suffered by the landlord
as a result of the termination of the tenancy, the amount of the excess is a
prohibited payment.

(3) 35A payment is a permitted payment if it is a payment to a letting agent in
consideration of arranging the termination of a tenancy at the tenant’s
request—

(a) in the case of a fixed term tenancy, before the end of the term, or

(b) in the case of a periodic tenancy, without the tenant giving the period
40of notice required under the tenancy agreement or by virtue of any
rule of law.

(4) But if the amount of the payment exceeds the reasonable costs of the letting
agent in respect of the termination of the tenancy, the amount of the excess
is a prohibited payment.

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(5) In this paragraph “fixed term tenancy” means any tenancy other than a
periodic tenancy.

Payment in respect of council tax

8 (1) A payment to a billing authority in respect of council tax is a permitted
5payment.

(2) In this paragraph “billing authority” has the same meaning as in Part 1 of the
Local Government Finance Act 1992 (see section 1(2) of that Act).

Payment in respect of utilities etc

9 (1) A payment for or in connection with the provision of a utility is a permitted
10payment if the tenancy agreement requires the payment to be made.

(2) A payment towards energy efficiency improvements under a green deal
plan (within the meaning of section 1 of the Energy Act 2011) is a permitted
payment if the tenancy agreement requires the payment to be made.

(3) In this Act “utility” means—

(a) 15electricity, gas or other fuel, or

(b) water or sewerage.

Payment in respect of a television licence

10 (1) A payment to the British Broadcasting Corporation in respect of a television
licence is a permitted payment if the tenancy agreement requires the
20payment to be made.

(2) In this Act “television licence” means a licence for the purposes of section 363
of the Communications Act 2003.

Payment in respect of communication services

11 (1) A payment for or in connection with the provision of a communication
25service is a permitted payment if the tenancy agreement requires the
payment to be made.

(2) But, in the case of a payment to a landlord, if the amount of the payment
exceeds the reasonable costs incurred by the landlord for or in connection
with the provision of the service, the amount of the excess is a prohibited
30payment.

(3) In this Act “communication service” means a service enabling any of the
following to be used—

(a) a telephone other than a mobile telephone;

(b) the internet;

(c) 35cable television;

(d) satellite television.

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Section 5

SCHEDULE 2 Treatment of holding deposit

Application

1 This Schedule applies where a holding deposit is paid to a landlord or letting
5agent in respect of a proposed tenancy of housing in England.

Interpretation

2 (1) In this Schedule, “the deadline for agreement” means the fifteenth day of the
period beginning with the day on which the landlord or letting agent
receives the holding deposit.

(2) 10But the landlord or the letting agent may agree with the tenant in writing
that a different day is to be the deadline for agreement for the purposes of
this Schedule.

Requirement to repay holding deposit

3 Subject as follows, the person who received the holding deposit must repay
15it if—

(a) the landlord and the tenant enter into a tenancy agreement relating
to the housing,

(b) the landlord decides before the deadline for agreement not to enter
into a tenancy agreement relating to the housing, or

(c) 20the landlord and the tenant fail to enter into a tenancy agreement
relating to the housing before the deadline for agreement.

4 If paragraph 3 applies, the deposit must be repaid within the period of 7
days beginning with—

(a) where paragraph 3(a) applies, the date of the tenancy agreement,

(b) 25where paragraph 3(b) applies, the date on which the landlord
decides not to enter into the tenancy agreement, or

(c) where paragraph 3(c) applies, the deadline for agreement.

5 (1) The person who received the holding deposit must repay it if—

(a) that person believes that any of paragraphs 8 to 12 applies in relation
30to the deposit, but

(b) that person does not give the person who paid the deposit a notice in
writing within the relevant period explaining why the person who
received it intends not to repay it.

(2) In sub-paragraph (1), “the relevant period” means—

(a) 35where the landlord decides not to enter into a tenancy agreement
before the deadline for agreement, the period of 7 days beginning
with the date on which the landlord decides not to do so;

(b) where the landlord and tenant fail to enter into a tenancy agreement
before the deadline for agreement, the period of 7 days beginning
40with the deadline for agreement.

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Exceptions

6 Paragraph 3(a) does not apply if or to the extent that the amount of the
deposit is applied, with the consent of the person by whom it was paid—

(a) towards the first payment of rent under the tenancy, or

(b) 5towards the payment of the tenancy deposit in respect of the tenancy.

7 If all or part of the amount of the deposit is applied in accordance with
paragraph 6(b), the amount applied is treated for the purposes of section 213
of the Housing Act 2004 (requirements in connection with deposits) as
having been received by the landlord on the date of the tenancy agreement.

8 10Paragraph 3(b) or (c) does not apply if—

(a) the landlord is prohibited by section 22 of the Immigration Act 2014
(persons disqualified by immigration status) from granting a
tenancy of the housing to the tenant,

(b) the landlord did not know, and could not reasonably have been
15expected to know, the prohibition applied before the deposit was
accepted, and

(c) if the landlord has instructed a letting agent in relation to the
proposed tenancy, the letting agent did not know, and could not
reasonably have been expected to know, the prohibition applied
20before the deposit was accepted.

9 Paragraph 3(b) or (c) does not apply if the tenant provides false or
misleading information to the landlord or letting agent and—

(a) the landlord is reasonably entitled to take into account the difference
between the information provided by the tenant and the correct
25information in deciding whether to grant a tenancy to the tenant, or

(b) the landlord is reasonably entitled to take the tenant’s action in
providing false or misleading information into account in deciding
whether to grant such a tenancy.

10 Subject to paragraph 13, paragraph 3(c) does not apply if the tenant notifies
30the landlord or letting agent before the deadline for agreement that the
tenant has decided not to enter into a tenancy agreement.

11 Subject to paragraph 13, paragraph 3(c) does not apply where the deposit is
paid to the landlord if—

(a) the landlord takes all reasonable steps to enter into a tenancy
35agreement before the deadline for agreement, and

(b) if the landlord has instructed a letting agent in relation to the
proposed tenancy, the agent takes all reasonable steps to assist the
landlord to enter into a tenancy agreement before that date, but

(c) the tenant fails to take all reasonable steps to enter into a tenancy
40agreement before that date.

12 Subject to paragraph 13, paragraph 3(c) does not apply where the deposit is
paid to the letting agent if—

(a) the agent takes all reasonable steps to assist the landlord to enter into
a tenancy agreement before the deadline for agreement, and

(b) 45the landlord takes all reasonable steps to enter into a tenancy
agreement before that date, but

(c) the tenant fails to take all reasonable steps to enter into a tenancy
agreement before that date.

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13 Paragraph 10, 11 or 12 does not apply (so that paragraph 3(c) does apply) if,
before the deadline for agreement—

(a) the landlord or a letting agent instructed by the landlord in relation
to the proposed tenancy breaches section 1 or 2 by imposing a
5requirement under that section on the tenant or a person who is a
relevant person in relation to the tenant, or

(b) the landlord or a letting agent instructed by the landlord in relation
to the proposed tenancy behaves towards the tenant, or a person
who is a relevant person in relation to the tenant, in such a way that
10it would be unreasonable to expect the tenant to enter into a tenancy
agreement with the landlord.

Section 8

SCHEDULE 3 Financial penalties etc

Interpretation

1 (1) 15In this Schedule, references to a financial penalty include a reference to an
amount which is required to be paid under section 10(2), (5) or (8) or 11(1).

(2) In this Schedule, references to imposing a financial penalty include a
reference to requiring the payment of such an amount.

(3) This paragraph does not apply to paragraph 4(4) (period for payment), 6(6)
20or (7) (appeals), 7 (recovery of financial penalty), 10 or 11 (proceeds of
financial penalties).

Notice of intent

2 (1) This paragraph applies where an enforcement authority proposes to impose
a financial penalty for a breach of section 1 (prohibitions applying to
25landlords) or 2 (prohibitions applying to letting agents) or Schedule 2
(treatment of holding deposit).

(2) Before imposing the financial penalty, the enforcement authority must serve
a notice on the landlord or letting agent of its proposal to do so (a “notice of
intent”).

(3) 30The notice of intent must be served before the end of the period of 6 months
beginning with the first day on which the enforcement authority has
sufficient evidence of the breach, subject to sub-paragraph (4).

(4) If the breach is committed on that day, and the breach continues beyond the
end of that day, the notice of intent may be served—

(a) 35at any time when the breach is continuing, or

(b) within the period of 6 months beginning with the last day on which
the breach occurs.

(5) The notice of intent must set out—

(a) the date on which the notice of intent is served,

(b) 40the amount of the proposed financial penalty,

(c) the reasons for proposing to impose the penalty, and

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(d) information about the right to make representations under
paragraph 3.

Right to make representations

3 A person who receives a notice of intent may, within the period of 28 days
5beginning with the day after the day on which the notice of intent was
served, make written representations to the authority about the proposal to
impose a financial penalty on that person.

Final notice

4 (1) After the end of the period mentioned in paragraph 3 the enforcement
10authority must—

(a) decide whether to impose a financial penalty on the person, and

(b) if it decides to do so, decide the amount of the penalty.

(2) If the enforcement authority decides to impose a financial penalty, it must
serve a notice on the person (a “final notice”) imposing that penalty.

(3) 15The final notice must require the penalty to be paid within the relevant
period.

(4) In sub-paragraph (3) “the relevant period” means—

(a) in relation to a financial penalty under section 8, the period of 28 days
beginning with the day after that on which the notice is served;

(b) 20in relation to an amount which is required to be paid under section
10(2), (5) or (8) or 11(1), the period specified in the notice.

(5) A period specified as mentioned in sub-paragraph (4)(b) must be a period of
at least 7 days but not more than 14 days beginning with the day after that
on which the notice is served.

(6) 25The final notice must set out—

(a) the date on which the final notice is served,

(b) the amount of the financial penalty,

(c) the reasons for imposing the penalty,

(d) information about how to pay the penalty,

(e) 30the period for payment of the penalty,

(f) information about rights of appeal, and

(g) the consequences of failure to comply with the notice.

Withdrawal or amendment of notice

5 (1) The enforcement authority may at any time—

(a) 35withdraw a notice of intent or final notice,

(b) reduce an amount specified in a notice of intent or final notice, or

(c) amend a notice of intent or final notice to remove the requirement to
pay an amount which the authority required to be paid under section
10(2), (5) or (8) or 11(1).

(2) 40The power in sub-paragraph (1) is to be exercised by giving notice in writing
to the person on whom the notice was served.

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Appeals

6 (1) A person on whom a final notice is served may appeal to the First-tier
Tribunal against—

(a) the decision to impose the penalty, or

(b) 5the amount of the penalty.

(2) An appeal under this paragraph must be brought within the period that is
the relevant period in relation to the penalty by virtue of paragraph 4(4).

(3) If an appeal is brought under this paragraph, the final notice is suspended
so far as it relates to the penalty which is the subject of the appeal until the
10appeal is finally determined, withdrawn or abandoned.

(4) An appeal under this paragraph—

(a) is to be a re-hearing of the authority’s decision, but

(b) may be determined having regard to matters of which the authority
was unaware.

(5) 15On an appeal under this paragraph the First-tier Tribunal may quash,
confirm or vary the final notice.

(6) The final notice may not be varied so as to make it impose a financial penalty
of more than £5,000 unless section 8(3) applies.

(7) If section 8(3) applies, the final notice may not be varied so as to make it
20impose a financial penalty of more than £30,000.

Recovery of financial penalty

7 (1) This paragraph applies if a person who is liable to pay a financial penalty
under section 8 does not pay the whole or any part of that financial penalty
in accordance with the final notice imposing that penalty.

(2) 25The enforcement authority which imposed the financial penalty may
recover the penalty or part on the order of the county court as if it were
payable under an order of that court.

(3) In proceedings before the county court for the recovery of a financial penalty
or part of a financial penalty, a certificate which is—

(a) 30signed by the chief finance officer of the authority which imposed the
penalty, and

(b) states that the amount due has not been received by a date specified
in the certificate,

is evidence of that fact.

(4) 35A certificate to that effect and purporting to be so signed is to be treated as
being so signed unless the contrary is proved.

(5) In this paragraph, “chief finance officer” has the same meaning as in section
5 of the Local Government and Housing Act 1989.

Recovery of prohibited payment etc

8 (1) 40This paragraph applies if a person who is liable to pay an amount under
section 10(2), (5) or (8) or 11(1) does not pay the whole or any part of that

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amount in accordance with the final notice requiring payment of that
amount.

(2) The relevant person may recover that amount or part on the order of the
county court as if it were payable under an order of that court.

5Assistance to recover prohibited payment etc

9 (1) An enforcement authority may help a relevant person to make an
application under paragraph 8(2).

(2) An enforcement authority may, for example, help the relevant person to
apply by conducting proceedings or by giving advice to the relevant person.

10Proceeds of financial penalties

10 Where an enforcement authority imposes a financial penalty under this Act,
it may apply the proceeds towards meeting the costs and expenses (whether
administrative or legal) incurred in, or associated with, carrying out any of
its enforcement functions under this Act or otherwise in relation to the
15private rented sector.

11 Any proceeds of a financial penalty imposed under this Act which are not
applied in accordance with paragraph 10 must be paid to the Secretary of
State.

12 (1) In paragraph 10, “enforcement functions in relation to the private rented
20sector” means enforcement functions relating to—

(a) residential premises in England that are let, or intended to be let,
under a tenancy,

(b) the common parts of such premises,

(c) the activities of a landlord under a tenancy of residential premises in
25England,

(d) the activities of a person carrying on English letting agency work
within the meaning of section 54 of the Housing and Planning Act
2016 in relation to such premises, or

(e) the activities of a person carrying on English property management
30work within the meaning of section 55 of the Housing and Planning
Act 2016 in relation to such premises.

(2) For the purposes of this paragraph “residential premises” has the meaning
given by section 1 of the Housing Act 2004 except that it does not include
social housing.

(3) 35For the purposes of this paragraph, “tenancy” means—

(a) a tenancy, whether or not the tenancy is an assured shorthold
tenancy, or

(b) a licence to occupy.